- Payday loan users can also get hit by bank fees, watchdog finds, By Becky Yerak, April 20, 2016, Chicago Tribune: “High interest rates might not be the only problem for borrowers who take out payday loans online, a consumer watchdog says. Borrowers who don’t keep enough cash in their checking accounts to pay off those short-term loans can also get hit with repeated overdraft or insufficient-funds fees from their banks, according to a report by the Consumer Financial Protection Bureau…”
- Bank fees are a hidden cost of payday loans, By Stacy Cowley, April 20, 2016, New York Times: “Payday loans are well-known for their high interest rates and fees, but for many borrowers, they have a second, less obvious cost: the bank fees incurred when automatic loan repayments fall short. Bank overdraft and insufficient-fund fees often add hundreds of dollars to the cost of a loan, according to a study released Wednesday by the Consumer Financial Protection Bureau, which is preparing to propose new rules for the payday loan industry. The agency said it analyzed 18 months of transaction data from nearly 20,000 accounts showing payments to Internet-based payday lenders…”
Tag: Payday lending
Payday Lending
Feds aim to protect low-income users of ‘payday’ loans, By Josh Boak (AP), March 29, 2015, Detroit News: “Each month, more than 200,000 needy U.S. households take out what’s advertised as a brief loan. Many have run out of money between paychecks. So they obtain a ‘payday’ loan to tide them over. Problem is, such loans can often bury them in fees and debts. Their bank accounts can be closed, their cars repossessed. The Consumer Financial Protection Bureau proposed rules Thursday to protect Americans from stumbling into what it calls a ‘debt trap.’ At the heart of the plan is a requirement that payday lenders verify borrowers’ incomes before approving a loan. The government is seeking to set standards for a multibillion-dollar industry that has historically been regulated only at the state level…”
Predatory Lending
- Rise in loans linked to cars is hurting poor, By Jessica Silver-Greenberg and Michael Corkery, December 25, 2014, New York Times: “The rusting 1994 Oldsmobile sitting in a driveway just outside St. Louis was an unlikely cash machine. That was until the car’s owner, a 30-year-old hospital lab technician, saw a television commercial describing how to get cash from just such a car, in the form of a short-term loan. The lab technician, Caroline O’Connor, who needed about $1,000 to cover her rent and electricity bills, believed she had found a financial lifeline…”
- Churches step in with alternative to high-interest, small-dollar lending industry, By Rebecca Robbins, January 9, 2015, Washington Post: “Every month for about three years, Nina McCarthy followed the same routine after payday. She’d go into a Check Into Cash near her home in the Richmond area, and pay off an open-end loan for $700 or $800 – and then she’d take out a new one for the same amount, never accumulating interest in the process. Then McCarthy’s overtime hours at work were cut. With rent, a car payment and a 3-year-old granddaughter to feed, McCarthy didn’t have $700 for Check Into Cash. McCarthy made a partial payment, but interest piled up rapidly, at a rate she recalls was 24.9 percent a month, or a nearly 300 percent annualized rate…”